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Stocks Swing After Markets Weigh Russian SanctionsStocks had a wild ride yesterday. We sold off to 4122, where we found support and retraced the entire move back to 4293, over a hundred points, before retracing a bit to the mid 4200's. This degree of volatility in the stock market makes it difficult to foresee what today or next week has in store, but we may be starting to form a massive inverse head and shoulders with a neckline in the mid 4200's. The Kovach OBV has picked up from lows suggesting there is real buying happening as stocks bottomed out. If this is the case, then we can expect the S&P 500 to make a run for 4364 again, then 4440. If not, we could retrace the entire move back to 4122, but this seems less likely.
FX:SPX500
by quantguy
2
What the Russian Invasion of Ukraine Means for StocksStocks have plummeted after Russia attacked Ukraine. We were seeing an inverse head and shoulders type pattern forming with a low of about 4272, but strong bear momentum smashed through this level and headed down further into the 4100 handle. Currently, we are finding support at 4122, where a green triangle on the KRI is providing support. After that, there is a vacuum zone to 4068, then 4009, the very last level in the 4000 handle. It is likely stocks will try to jostle for footing, so expect some volatility today. We could retest 4272 again, but that is most likely the ceiling for today.
FX:SPX500Short
by quantguy
2 Years later, ARKK is in the same place. Today I will update my view on ARKK from the previous post I made. I found it super interesting to see how one of the most renowned assets in the post-pandemic era has erased ALL its gains from the beginning of the bear market back in February 2020 until now. From a logarithmic perspective, we can see that the current decline is the deepest one and almost doubled previous declines. Now I would like to go into technical elements and the situation where we may have interesting trading opportunities. I am still paying attention to the internal descending trendline. Trendlines are incredible tools to help you avoid getting into the market at the wrong moment. For example, here, the descending trendline can be interpreted as "Below the trendline, avoid bullish setups. Above the trendline, start thinking in bullish setups." But that's not all; I don't want to see a breakout of the descending trendline only. I want to observe a clear correction with the proportions you can see on the circle. IF that happens, I will trade on a new local high towards the higher zone of the descending channel. If nothing of that happens, because the price keeps falling into the ugliest correction of all, I would stay on the sidelines until the technical elements confirm that we are in a good situation to develop setups. Thanks for reading; feel free to share your view and charts in the comments.
AMEX:ARKK
by ThinkingAntsOk
8
Can Stocks Break Out??Stocks have been struggling to find footing in the wake of Russia tensions. As we mentioned before, stocks found support at 4272. A green triangle on the KRI confirmed the support here. We are currently attempting a bit of a pivot from here, with 4364 providing resistance for now. We are seeing a (rather messy) inverse head and shoulders type pattern here with a "neckline" at 4364. If we are able to break out from this, we will surely see resistance at 4440, then 4580. The Kovach OBV still is not convinced of any bullishness at this point, and is remaining at lows for now.
FX:SPX500Long
by quantguy
Stocks Selloff with Russia TensionsStocks turned sharply lower as the Russia/Ukraine crisis has escalated. Putin has sent troops to separatist regions in the Ukraine and the UK and EU have suggested to respond with sanctions. We have retraced the range fully, testing 4272 once more. Recall that this level has been in our reports all this month, so you should have been prepared. We are seeing support here at 4272, and appear to be attempting a pivot from this level. However the Kovach OBV is still bearish, suggesting that we may be seeing some headwinds. Our next target is 4364, then 4440. We should continue to have support from 4272 in the event of another selloff, but if that breaks, then 4245 is the next level where we can expect support.
FX:SPX500
by quantguy
This is the movement I want to see before trading XAUUSDXAUUSD is one of my favorite assets to trade alongside S&P500, Crude oil, and BTC. I'm interested in the current zone because we are on the upper level of the range where the price has been moving since May 2021. It's from this type of situation where we tend to observe reversal movements or breakouts of the level for further bullish movements. The filters I'm working on are for bullish continuations, which I want to see before trading . a) Clear breakout of the current resistance level b) After that, I want to see a 14 days correction, as you can see on the circle. c) IF that happens, I will trade (maybe on a new local high) towards the next resistance level (previous all-time high); the expected risk to reward ratio of a setup like this can be around 2 to 2.5. Now, I will wait for the price to fulfill my filters, and if that happens, I will trade. If that doesn't happen, I will stay on the sidelines. Thanks for reading! Feel free to share your view and chars in the comments.
OANDA:XAUUSD
by ThinkingAntsOk
4
Don't fall for the NarrativeThere's a general narrative going around of "buy the dip" and "look at these undervalued stocks". The goal here is not to compare Facebook to Microsoft to Paypal as companies, but to look at relative price structure between a handful of popular stocks. In this case, we have a few giant companies; Tesla , Facebook and Microsoft , charted against the smaller Paypal and Netflix , and which have taken a recent beating (along with Facebook ). The lines in the chart are an 1800 week linear regression of Microsoft's per-dollar performance relative to the M2 . The lines don't mean anything and are merely a rough guideline of history-projected asset strength. The prices are M2 adjusted to account for money supply expansion. Facebook has been underperforming since 2018 after making a huge run in 2013 onward, but the notion that "it's a good deal" hardly stands up if you look at the relative trajectory of Microsoft and Tesla . Facebook was one of the biggest to rise, and was one of the first to fall. Microsoft on the other hand has a huge history of being an efficient capital allocator, and will probably be one of the last to fall. Let's ask the question: If Microsoft and Tesla make the same correction as did Paypal and Facebook , do you think Paypal and Facebook will be lower or higher following this hypothetical correction? The gut feeling here is that Paypal/ Facebook / Netflix /Peloton etc. COULD end up falling even more, given that many of these larger cap stocks are still standing well. I would rather short Tsla / Msft than long Paypal/ Facebook / Netflix /Peloton etc. given the current environment. It's easy to want to fomo into these stocks when you look at a year or two of history, but I think this paints a more realistic picture. Good luck and hedge your bets :) Note: The arrows are not price targets, just medium term directional indicators.
NASDAQ:MSFTShort
by fringe_chartist
Stocks Dive but Find SupportThe S&P 500 has retraced from relative highs at 4487, reentering the previous value we identified yesterday. Recall that we asserted yesterday that if stocks retraced, they would likely enter the value area between 4272 and 4440. We do appear to be finding support roughly in the middle of this range, just above 4364, where we saw support Monday. Stocks could be feeling out a new value area between 4364 and 4487, relative highs. The Kovach OBV has curved over, suggesting that momentum has dried up for now. If we continue our descent and break through 4364, then 4272 is sure to provide support. If we see a rally, then we must break 4487, then 4580 is the next target.
FX:SPX500
by quantguy
This is what I want to see on PYPLThe first thing to say is, "I'm faaaar away from developing a setup right now on PYPL; when things are melting, trying to find a bottom is a really unprofitable business (or at least for me). So that's why I use relevant supports/resistances or trendlines as main levels before thinking about developing new setups. In this case, the first trading opportunity I would be interested in is IF the price can break the first trendline. IF that happens, I want to see a correction, and a setup on a new high may be a good opportunity to get exposure to a new bull run. I would like to add to this explanation why I always wait for breakout + correction before trading. This is because most of the time, we don't observe levels being broken like if nothing were there, most of the time when the price reaches or breaks a key level we will tend to observe some kind of retracement (this is valid both for bearish and bullish directions). Waiting for this is a good way of avoiding fakeouts because you are not entering on the first breakout. This means that your drawdowns will tend to be more controlled because you are able to avoid A LOT of low-quality situations by doing this. The negative side is that sometimes the price breaks the level like if nothing were there and you miss the setup (however, I have realized that this is the exception) Going back to the PayPal explanation, I think patience will be my strategy here; I want to see a clear bottom which means observing several more candlesticks before saying "oh, this is reversing" and then paying attention to the descending trendlines, as the first place where I'm thinking on developing setups. At the moment, PYPL stays on my watchlist as "WAIT WAIT WAIT." Thanks for reading! Please feel free to share your view and charts in the comments.
NASDAQ:PYPL
by ThinkingAntsOk
3
Eurozone 100 gives a hintA few important notes here: We failed to sustain 3500 thus far after 2 breaks above trend and about 10 tests total of the trend in the new year. We haven't retested the low of 3400 which was only tested once/twice since the new year. If you look at what the RSI is telling us about local momentum, we'll see more downside UNLESS we can pull off a 3500 retest, which the market is aiming to do, but is looking rather weak. RSI avg (yellow) hasn't broken below 30 so it looks like an impulsive and risky buy here, rather than a safe buy.
EShort
by fringe_chartist
E100 gives a hintA few important notes here: We failed to sustain 3500 thus far after 2 breaks above trend and about 10 tests total of the trend in the new year. We haven't retested the low of 3400 which was only tested once/twice since the new year. If you look at what the RSI is telling us about local momentum, we'll see more downside UNLESS we can pull off a 3500 retest, which the market is aiming to do, but is looking rather weak. RSI avg (yellow) hasn't broken below 30 so it looks like an impulsive and risky buy here, rather than a safe buy.
EShort
by fringe_chartist
Conclusions on the current context on MAToday, we will look at Master Card, a key name in the information & technology sector, with a market cap of 375B. As a comparative thing, VISA has a market cap of 484B So, what are the main technical elements we can observe here? 1) The price has been inside a massive daily correction of 275 days, and a few weeks ago, we observed the breakout of it. 2) Now, we can observe a clear "throwback" (name to define the retest movement after a breakout on a bullish trend) that has been developing on the last 15 days One of the fundamental aspects of the way we trade is understanding the current context and comparing it with historical data (that's why I love using the logarithmic chart) As you can see, this is not the first time we have observed a correction of this size, and this has been a common behavior since 2007. What's my conclusion on this? Take all those corrections I have shown you in the Log chart, and check this concept "Drawing the corrections in the same way I'm doing it on the main chart of this post" after we have the breakout and the throwback, on average, trading on a new high its a great level to get exposure to a possible bullish movement. Of course, this is not working in all of them, but I can see an edge that I need to polish a little more before defining my final setup. (For this basic test I conducted, I placed stop losses below the throwback) What if this keeps falling? Then you don't trade What happens if you trade this and it's a stop loss? That's always a chance, to be precise, 50% of the time that happens to me, so make sure you control your risk (The general concept is 1% risk per setup) and only trade if your risk to reward ratio is equal to or higher than 1.8 Thanks for reading; I hope this was useful, and feel free to share your view and chart in the comments! Thanks.
NYSE:MA
by ThinkingAntsOk
6
Stocks Range, Anticipating Russia/Ukraine DevelopmentsStocks are ranging after inching past resistance at 4462. The S&P 500 was able to break this level of strong resistance but just barely, encountering resistance at the next level at 4487. We met resistance here confirmed by several red triangles on the KRI, and then retraced back to support at 4431. The Kovach OBV has leveled off completely suggesting it could go either way from here. The markets are clearly not convinced that the Russia/Ukraine saga is nearing a close. If we retrace further, we will reestablish the value area between 4272 and 4440. If we see a burst of momentum, then we must clear 4462 again, then the next target is 4521. After this we must solidly break 4580 before considering higher levels.
FX:SPX500
by quantguy
This is my current plan on ROKUROKU is down 70% from the previous "ATH" and is below a clear descending trendline; I'm really interested in this kind of name to look for opportunities in case a new bull run comes. My main thesis to support the idea that a new bull run may come is on the logarithmic chart. As you can see, these big drops have already happened in the past , and after that, we observed massive bullish movements. So my view is that there are similarities between them and that past behavior may repeat again. Ok, nice that these mean that we should buy now? Of course not; that's why we use technical analysis to detect common patterns between all these past situations and try to find which would be the most efficient way of trading this "opportunity." My conclusion is that I want to observe breakout followed by a correction in the daily chart of 7 to 12 days and a clear 10% retracement. IF that happens, then I will be interested in trading on a new local high in the same way you can see on the chart, with a target on the next major resistance level. What happens if the price keeps falling? Then I will not trade, and I expect a move towards the next support. From there, I will look for the same setup I'm mentioning here. Thanks for reading! Feel free to share your view and charts in the comments!
NASDAQ:ROKU
by ThinkingAntsOk
6
ARKK | Inside the descending channel Today we will look at the current situation on ARKK. Technical Elements: -The price has reached the lower zone of the cloned channel. -Inside the descending channel, we can observe a descending trendline. The main element I want to highlight here is that the price had reached a significant target for the bearish movement. Can the price keep falling? Of course, nobody knows with certainty what the price may do. However, we are in an excellent spot to start thinking about possible bullish situations. What's the idea I'm developing? Wait for the breakout of the current descending trendline + a corrective pattern (red circle) IF that happens, I think we have good bullish potential to trade on a new local high towards the higher trendline of the descending channel. At the moment, this is an idea that requires patience to see how the price evolves. Thanks for reading!
AMEX:ARKK
by ThinkingAntsOk
5
Tensions Easing? Stocks Get a LiftStocks have gotten support from 4364, roughly the midpoint of the range they were holding between 4272 and 4440. We have since broken through that high and attempted 4462, the next level above, where we are currently meeting resistance, confirmed by a red triangle on the KRI. Perhaps this rally follows news that some Russian troops have returned to base, and the Ukranian tensions may be easing a bit. The Kovach OBV has picked up ever so slightly, but if we cannot break through to higher levels, we should see the bear rout return, and test 4440 again, or break lower into the previous value area once more. We still anticipate 4272 as a floor for now. The next major target is 4580 if bull momentum returns.
FX:SPX500Long
by quantguy
In depth analysis of the stock market! Macro series pt3Part 3 This is the third part of the macro analysis series. In this part we'll focus on analyzing the current situation of the stock market based on fundamental and technical analysis, while trying to map out the future depending on how the Fed and the economy move. You can find the rest of the analysis on the links down below. Let’s now transition into stocks and have a look at the three major US indices, as they are the best way to get a good picture of what is going on in stocks markets broadly. It is hard to find a way to get the full picture in one chart, especially when it comes to looking things globally. That’s why we’ll focus only on the S&P 500, Nasdaq 100 and Russell 2000, due to the fact that the US has been leading this rally, as well as because we can get information on the performance of different types of stocks. Starting with the S&P, it is clear that it has broken its uptrend and has found support on the first major support level, around 4220-4280. On that level it also happens to be the 300 DMA, but the issue is that the market keeps testing the support (bearish) and it has been rejected by the 200 DMA on the first bounce. Nevertheless, the support has held beautifully up until now and might have even bottomed. In our opinion this isn’t the final bottom as we expected to see more downside at some point in 2022, with 3900-4000 being the first major target. This area is potentially one of the best ones for the final bottom as that’s the only breakout the market didn’t retest, plus there is a gap there on SPY. So far, the current correction was 12.4% top to bottom, and getting down to 3900-4000 would be around 18%, which is more than enough for a major bottom to be in. Back in 2018 it took a 21% correction for the Fed to pivot and stop raising rates. It wouldn’t surprise us at all if the Fed was forced to stop raising rates and maybe even restart QE if the S&P500 fell more than 20%, although it wouldn’t do it just because stocks fell. If US treasury bonds are going down (yields up), then the 60/40 portfolios would be losing value rapidly by being forced to sell both bonds and stocks. Of course, the problem isn’t just these two markets going down and affecting investor sentiment and spending, but the problems they can create on credit markets broadly. For example, if stocks and bonds go down, it is very likely that corporate bonds will go down too, and therefore many companies which are already struggling, would be forced to borrow with much higher yields or not be able to borrow at all. Again, the problem is that there is too much debt and the system isn’t be able to withstand rapid changes in interest rates and liquidity. Like we mentioned above, the S&P doesn’t show the full picture, so we need to add the other two major indices to the mix. We’ll start with some important stats and move into their charts. From their Feb 2020 highs, the S&P went up 41%, the Nasdaq 71% and the Russell 44%. The Russell was the best performer from the March 2020 bottom up until March 2021, where it started going sideways and entered a very clear distribution phase. That’s because it benefited the most from long term US yields going up and the loose financial conditions that helped smaller companies do well. Another important component to the rally was the speculative mania that started from the Wall Street Bets subreddit with Gamestop, and then spread into other heavily shorted companies which started rallying hard. This is potentially a sign that deflation is coming back and that buying US large caps is still the best bet over the next few months. However, once that mania started reaching its peak, we saw several sectors and ETFs roll over, in and out of the US. We saw SPAK, ARKK and even the Shanghai index all top at the same time on Feb 2021. In exactly one year the RUT had 150% rally from top to bottom and until reaches its 2018-2019 highs it will probably underperform relative to other major US indices. Despite many stocks performing poorly, the SPX and NDX kept going higher, so it started becoming obvious that something was shifting. So how did that happen? How could several sectors of the market go down, how could so many stocks go sideways and lose value, and the major US indices continue to rally? The clear explanation is that the rally was led by US tech giants. US tech behemoths kept gaining market share and kept growing and growing. Despite what many people might think, these tech behemoths going up while everything else is suffering isn’t a long-term bullish signal, neither an inflationary one. That’s because many view these companies essentially as safe assets and treat them like long duration bonds. When looking at where stocks are right now, it is very clear that they are significantly oversold on a Daily timeframe, something also confirmed by several metrics. At the same time though, they are still pretty expensive as they had exceeded the yearly average return (10%) by a lot. Their momentum is strong to the downside and on a weekly timeframe they haven’t gotten oversold. Many of you have probably heard people say many times that the stock market is overvalued and that a big bear market is near, only to see the market rally relentlessly up until a month ago. It is very important to note that the stock market based on most metrics is actually overvalued and has reached levels that historically would have led to a bear market. Even though this might be true; it doesn’t mean that because a certain signal worked in the past it will work again. Regardless of what all these metrics are indicating, the stock market could pull another 2-3x from here in the next decade, while having several 10-30% corrections in the meantime. That’s because the dynamics of the markets are very complex and keep evolving, while more and more people are depended on the stock market to go up, both of which have turned the stock market as something that the government and the Fed need to protect. Even if that wasn’t the case, any market can stay irrational for a very long period of time. All the people who are believe they are thinking rationally are dumfounded because invest based on some potentially outdated models, as they discount many other factors like market structure, psychology and liquidity. Eventually they will probably be right, but in the meantime, they’d have missed a lot of opportunities. Currently the SPX and NDX flirted with support for a bit and bounced, while RUT made a new low and then bounced. The next resistance for SPX and NDX is 3-5% higher, while for RUT it is 5-10% higher. Getting there doesn’t mean we will get a huge rejection, as it is more likely that markets take a break and chop before deciding which direction they are going to choose. It is even possible that the SPX could make new ATHs before it starts rolling over again. The reason is that we could shake out late bears and potentially late longs coming in to take advantage of the ‘liquidity’ the Fed is providing as QE hasn’t stopped yet. The fact that the markets closed the week at pretty much the same level they were before hawkish Fed meeting, is fairly bullish. Because it means that the markets have somewhat priced in a lot of the negativity and there are many people who sold late. Even from a sentiment point of view, there are several ‘indicators’ that are screaming buy. Some examples are twitter polls both in stocks and crypto being skewed 25/75 bullish/bearish, real-life people I know that wanted to buy at 65k BTC tell me they are worried that I could lose everything, as well as everyone on twitter talking about how ARKK is down so much that its 2-year performance is now equivalent to that of Berkshire Hathaway. In terms of the next key support for SPX and NDX, it is 10% lower while for RUT it is 10-16% lower. If the market gets there, we could either see the final bottom there, or simply a very and a strong bouncer. It is pretty early to tell whether the bull market is over yet, but in our opinion it seems unlikely. By looking back at the 1995-2000 period on the NDX, we can see that once the market broke above the major diagonal resistance, there were lots of 10-20% corrections and retests of that diagonal. This time around we’ve only tested the diagonal twice and this the largest correction out of the four that have occurred and were larger than 10%. The only index out of the three that is indicating major issues, is the Russell. Another very important index that isn’t tracking the performance of stocks, but is tracking the volatility of the stock market is the VIX. The VIX can give us a lot of information around fear, uncertainty and change, based on the levels it is trading at and based on how it’s moving. Generally speaking, when the VIX is trading below 16, there is little uncertainty, fear and change, when the VIX is trading 16-32 things there is change, however fear and uncertainty are at moderate levels, while with VIX above 32 there is a lot of uncertainty, a lot of fear and things are changing rapidly. The higher the VIX, the more intense the sentiment on the market. During this correction the VIX got up to 39, which historically is pretty high and was even higher than the 36-37 zone which has as acted as ‘resistance’ on the VIX several times in the past. Although this could be the top for the VIX (bottom for stocks) like in Dec 2018 when the Fed was hiking rates, in our opinion it isn’t and we expect 48-50 to be the top for VIX (bottom for stocks). There are several reasons behind this thinking and a lot goes back to the Fed, the economy, etc, most importantly however, it has to do with the psychology of the market. We feel investors haven’t been scared enough in order to fully capitulate and be shaken out of their longs, neither is the Fed cornered enough to do a 180 turn yet. With so many things changing in the world it doesn’t make sense for volatility to be so low and that at some point as the Fed is raising rates, something could break and cause significant panic. One thing to keep in mind is that in case of severe economic weakness and rapid drop in the inflation rate, then the Fed could use that as an excuse not to raise rates before the market forces them to stop. In that scenario the VIX might topped for a very long time at 39, as the markets will assume the Fed has their back and they don’t have to worry about higher interest rates. During the GFC the VIX peaked at 95 and during the Covid crash at 85. Back then once it got down to 15-16 it had two spikes up to 48, while this time around it has remained lower with most peaks below 40. Of course, 39 is a perfectly reasonable top for 2022, although we don’t see a way that the Fed hikes 3+ times without at least one of them creating significant panic. Last point on the VIX and stocks broadly, is that it looks like it has formed a significant bottom throughout 2021 and that it currently has a proper long term bullish structure. It’s pretty rare to see it form significant higher highs and higher lows, which could be seen as a sign that there is at least another leg up. Maybe go down to 18-22, test the yearly Pivot & the major moving averages, and then pump.
FX:SPX500
by BitcoinMacro